CHAPTER ONE

INTRODUCTION

Multi finance industry in Indonesia accounts for almost 50% in total financial firm’s asset
in leasing industry. PT Wahana Ottomitra Multiartha, Tbk. (WOM Finance) is one of the leading
motorcycles financing company in Indonesia.

WOM Finance is a multi finance company that provides financing or leasing for new and
used Japanese motorcycles particularly for brands name likes new Honda, Yamaha and Suzuki.
Further details can be found on the below chapters of this paper.
 CHAPTER TWO
BRIEF HISTORY OF WOM FINANCE
(By Charlie)

PT Wahana Ottomotra Multiartha was established in 1982 and the name of this company
was PT Jakarta Tokyo Leasing. In 1997, this company was acquired by PT Fuji Semeru Leasing,
the moment which caused this company changed its name to PT Wahana Ometraco Multiartha.
In year 2000, the company transformed into WOM Finance, provide financing services for new
and used motorcycles for Honda, Yamaha and Suzuki.
In 2003, the Company entered the Capital Market by issuing Bonds I amounting to Rp
300 billion. In 2004, WOM Finance became a public company through the Initial Public
Offering by the registration of its stocks at the Jakarta Stock Exchange and the Surabaya Stock
Exchange. In 2005, PT Bank International Indonesia and its consortium, International Finance
Corporation and DBS Nominees Pte, became the strategic partners of WOM Finance by
acquiring 67% of the Company’s shares. Subsequently, WOM Finance issued Bonds II
amounting to Rp 500 billion.
In 2006, the Company issued Bonds III amounting to Rp 825 billion. The Company’s
excellent performance was recognized by receiving various prestigious awards such as 2006
Multi-finance Awards from Infobank Magazine and 2007 Multi-finance Awards from Investor
Magazine. In 2007, the Company issued Bonds IV amounting to Rp 1 trillion. In the same year,
the Company was ranked as the third largest motorcycle financing company with the total assets
of Rp 4.8 trillion.
In addition to expanding its sales network, at the end of 2008 WOM Finance already
performed internal consolidation and improved risk management policies. By selecting the right
portfolios, WOM Finance has been able to increase its profit and to steer its business to a better
and healthier approach. WOM Finance already booked more than 1 million customers and
constantly made efforts to facilitate the services rendered and improved customer satisfaction by
implementing the PeSAT program (Prompt Service, Easy Processing, Safe and Trustworthy).
 CHAPTER THREE
INDUSTRY STRUCTURE
(By Anindhita Chandri & Rudy Francis)

(By Anindhita Chandri)

As has been explained in the previous chapter, we knew that WOM is a financing
company. This chapter will explain about the financing industry, supply and demand in the
industry, the market type, and the barriers for financing industry in Indonesia.

Industry Concentration
What is finance company? According to Britannica Concise Encyclopedia, “Finance
company is specialized financial institution that supplies credit for the purchase of consumer
goods and services. Finance companies purchase unpaid customer accounts at a discount from
merchants and collect payments due from customers. They also grant small loans directly to
consumers at a relatively high rate of interest.”1 What make it different from a bank? Finance
and Investment Dictionary states, “Finance company is company engaged in making loans to
individuals or businesses. Unlike a bank, it does not receive deposits but rather obtains its
financing from banks, institutions, and other money market sources”.2
There are four major financing activities; leasing, consumer financing (consumer credit),
factoring, and credit card. Most of Indonesian people misinterpret leasing as all financing
activities. Leasing is a process where firm can obtain the use of a certain fixed assets for which it
must pay a series of contractual, periodic, tax deductible payments.3 Consumer credit is basically
the amount of credit used by consumers to purchase non-investment goods or services that are
consumed and whose value depreciates quickly, such as automobiles, education, boat and trailer
loans but excludes debts taken out to purchase real estate or margin on investment accounts. 4
Factoring is a financial transaction whereby a business sells its accounts receivable to a third
party (called a factor) at a discount in exchange for immediate money with which to finance

1
Answer.com, (2010), Finance Company: Definition from Answer.com, posted on Answer web site, retrieved January
15, 2011.
2
Ibid.
3
Wikipedia.com, (2011), Leasing, posted on Wikipedia web site, retrieved February 7, 2011.
4
Investopedia.com, (2010), Consumer Credit, posted on Investopedia web site, retrieved February 7, 2011.
continued business. For example, a company sells their invoices to other company. 5 A credit card
is a small plastic card issued to users as a system of payment. It allows its holder to buy goods
and services, which the user can borrow money for payment to a merchant or as a cash advance
to the user.6
It’s interesting to observe the multi-finance industry in Indonesia, which started to grow
in 1974. In 1989, they tended to enlarge their asset with regard to consumer minded that a good
company should be big, healthy, and strong. Unless, then they will be suffered or even closed
down. The company will become more reliable than others by having great assets. The
next scenario, they began to merge into one group. It succeeded the credibility and the market
control grown up. However this scheme began to fade since they started to re-emphasize on the
basic economic principal, to maximize the profit. In 1991, there’s a big change due to tight
money policy. The interest rate increased rapidly, as a result there were many loans that have
been approved had to be postponed. This policy affected on the company’s capital. They were
sort of funds, therefore they merge each other.7
The number of multi-finance company decreased since 2007, it has to be freeze because
they couldn’t fulfill the obligation, such as the capital minimum requirement and financial report.
Badan Pengawas Pasar Modal (Bapepam) was tightening the multi-finance regulation. In 2007,
there were 5 multi-finance companies that being withdrawn by the government and 10
companies in 2009. By the end of 2009, there were 198 multi-finance companies in Indonesia. 8
Although the number of multi-finance companies were decrease, but the growth of multi-finance
industry in Indonesia is relatively high. In 2009 the growth was slowing down, due to global
economic crisis in the late 2008. However the multi-finance business was growth 17.4% in five
years (2006-2010). It’s triggered by a good economic condition. The business still relies on the
leasing and consumer credit, which contributed 95% of the total financing.9
Based on the Bank Indonesia (BI), the growth of multi-finance business is IDR 137.2
trillion by 2009 or 4.3% higher then 2008. Consumer credit is the largest contributor as IDR 90.3
trillion (65.78%). Total asset of the multi-finance business was growth by 3.3% from IDR 168.4
5
Wikipedia.com, (2011), Factoring, posted on Wikipedia web site, retrieved February 7, 2011.
6
Wikipedia.com, (2011), Credit Card, posted on Wikipedia web site, retrieved February 7, 2011.
7
Asosiasi Perusahaan Pembiayaan Indonesia, (2005), Industri Leasing di Indonesia: Sejarah, posted on Asosiasi
Perusahaan Pembiayaan Indonesia web site, retrieved January 27, 2011.
8
Indonesian Commercial Newsletter, (August 2010), Industri Multifinance Semakin Besar, posted on Indonesian
Commercial Newsletter (ICN) web site, retrieved January 27, 2011.
9
Ibid.
trillion to IDR 174 trillion by the end of 2009. Multi-finance industry in Indonesia is under
Bapepam. Their products and services are leasing, factoring, consumer credits, and credit cards.
The dominant multi-finance industry activities still held by the consumer credit sector (cars,
motorcycles and electronic equipment) which reached IDR 83.2 trillion.10 WOM finance engaged
in consumer credits for motor cycle. Their main activity is to provide goods and services based
on consumer needs with a system of payment in installments or periodically.11

Demand and Supply

Demand is the desire to own anything, the ability to pay for it, and the willingness to
pay.12 While supply is the amount of some product which is available to customers. 13 Currently,
multi-finance businesses played the most important role in automotive sales. Almost 80% of the
automotive were sold through consumer credit. 14 While in specific, WOM Finance is a multi-
finance company focused on the motor-cycle consumer credit, then the motor-cycle wholesales
could be represent as the demand for multi-finance industry.

10
Be Flasher, (August 2009), Peringkat Perusahaan Pembiayaan (leasing) 2009 (info Bank), posted on Be Flasher
web site, retrieved January 27, 2011.
11
Indonesian Commercial Newsletter, (August 2010), Industri Multifinance Semakin Besar, posted on Indonesian
Commercial Newsletter (ICN) web site, retrieved January 27, 2011.
12
Sullivan, Arthur, Economics: Principles in action. Upper Saddle River, New Jersey, Pearson Prentice Hall, 2003,
page 79.
13
Wikipedia.com, (2011), Supply, posted on Wikipedia web site, retrieved February 7, 2011.
14
Karnoto Mohamad, Infobank No.377: Pembersihan Multifinance Berlanjut, Jakarta, Infobank, 2010, page 13.
Motorcycle Production Wholesales Domestic and Exports
Year Production Wholesales Exports
1996 1,425,373 1,376,647 50,255
1997 1,861,111 1,801,090 51,816
1998 519,404 433,551 84,363
1999 571,953 487,751 99,651
2000 982, 380 864,144 115,278
2001 1,644,133 1,575,822 74,948
2002 2,318,214 2,265,474 52,517
2003 2,814,054 2,808,896 13,806
2004 3,897,250 3,898,744 1,774
2005 5,113,487 5,074,186 15,308
2006 4,458,866 4,428,274 42,448
2007 4,722,521 4,668,263 25,632
2008 6,264,265 6,215,831 64,968
2009 5,884,021 5,881,777 29,815
Until Aug 2010 5,052,718 5,045,339 17,382
Source: Asosiasi Industri Sepeda Motor Indonesia (AISI).

AISI Member Motorcycle Wholesales in 2009

(Based on the brand and the category)
Brand Motor - Less than Motor-Scooter Motor - Sport Total
100 cc
Honda 1,659,764 861,740 182,593 2,704,097
Yamaha 1,217,274 1,237,302 220,316 2,674,892
Suzuki 291, 947 119,612 26,599 438,158
Kawasaki 16,187 - 45,030 61,217
Kanzen 3,413 - - 3,143
Total 3,188,585 2,218,654 474,538 5,881,777
Percentage 54.21 37.72 8.07 100
Source: Asosiasi Industri Sepeda Motor Indonesia (AISI).

The above data excluded the non-AISI members (TVS, Bajaj, Minerva, Viar, KTM, Jialing).
There’s no accurate data for their sales, but the wholesales was predicted more or less 10,000 to
20,000 units in 2009.15 The growth of motor-cycle sales will increase the consumer credit
demand. The multi-finance company was able to absorb more motor-cycle consumer credit.16
In 2007, there are 217 multi-finance companies registered, but only 158 active
companies. Meanwhile in 2008, there were 212 multi-finance companies. 17 And by the end of
2009, there’s 198 multi-finance companies listed in Badan Pengawas Pasar Modal (Bapepam).18
15
Kompas, (January 2010), Penjualan Sepeda Motor 2009 Mencapai 5,88 Juta Unit, posted on Kompas web site,
retrived February 3rd, 2011.
16
Tempo Interaktif Bisnis, (March 2007), Laba Bersih WOM Finance Anjlok, posted on Tempo Interaktif web site,
retrieved January 15, 2011.
17
Niaga Finance, (June 2008), Izin 5 Multi Finance Terancam Dicabut, posted on Niaga Finance web site, retrived
February 3rd, 2011.
18
Indonesian Commercial Newsletter, (August 2010), Industri Multifinance Semakin Besar, posted on Indonesian
Commercial Newsletter (ICN) web site, retrieved January 27, 2011.
(By Rudy Francis)

Market type
WOM Finance targeted for middle to low income class consumers. Dominated of several
players in multi finance companies which created an monopolistic competition. Many of leasing
companies can enter in the market.

Barriers to entry
1. Limited financial flexibility
Multi finance companies are not legally allowed to make loans or extend credit directly to
the public. Multi finance companies are excluded from conducting direct withdrawal of supports
from the public, they also has to form of demand, deposit, and savings as collateral for loans
from banks that become creditors

2. Intense competition.
Since a lot of multi finance companies enter the market, lead to tight or intense
competition. One of the major competitors is ADIRA Finance who runs a leasing company for
automobiles and motorcycles.

3. Relatively high cost of fund

WOM Finance as a leasing company has to pay lot of incentives for their sales employees
and small leasing or renting dealer as their agents.

CHAPTER FOUR
 INDUSTRY CONDUCT
(By Arya Perdana)

Pricing the product

For example :
Price list Honda Beat in Wom finance
TYPE DP INSTALLMENT (Rp)
HONDA BEAT (Rp) 11x 17x 23x 29x 35x
1,550,000 1,208,000 845,000 672,000 575,000 510,000
1,800,000 1,183,000 827,000 658,000 563,000 499,000
2,000,000 1,162,000 813,000 647,000 554,000 491,000
2,250,000 1,137,000 795,000 633,000 542,000 480,000
REAL PRICE 2,500,000 1,111,000 778,000 619,000 530,000 470,000
Rp12,350,000 2,750,000 1,086,000 760,000 605,000 519,000 460,000
3,000,000 1,060,000 742,000 592,000 507,000 449,000
3,250,000 1,035,000 725,000 578,000 495,000 439,000
3,500,000 1,009,000 707,000 564,000 483,000 428,000
3,750,000 984,000 689,000 550,000 471,000 418,000

TYPE DP TOTAL INSTALLMENT (Rp)

HONDA BEAT (Rp) 11x 17x 23x 29x 35x
1,550,000 14,838,000 15,915,000 17,006,000 18,225,000 19,400,000
1,800,000 14,813,000 15,859,000 16,934,000 18,127,000 19,265,000
2,000,000 14,782,000 15,821,000 16,881,000 18,066,000 19,185,000
2,250,000 14,757,000 15,765,000 16,809,000 17,968,000 19,050,000
REAL PRICE 2,500,000 14,721,000 15,726,000 16,737,000 17,870,000 18,950,000
Rp12,350,000 2,750,000 14,696,000 15,670,000 16,665,000 17,801,000 18,850,000
3,000,000 14,660,000 15,614,000 16,616,000 17,703,000 18,715,000
3,250,000 14,635,000 15,575,000 16,544,000 17,605,000 18,615,000
3,500,000 14,599,000 15,519,000 16,472,000 17,507,000 18,480,000
3,750,000 14,574,000 15,463,000 16,400,000 17,409,000 18,380,000

- Maximum revenue of Honda Beat credit in Wom finance is on Rp.1,550,000 for down
payment with 35 times installment. The turnover is Rp.19,400,000 and the profit is
Rp.7,050,000 or 57% of the real price
- Minimum revenue of Honda Beat credit in Wom finance is on Rp.3,750,000 for down
payment with 11 times installment. The turnover is Rp.14,574,000 and the profit is
Rp.2,224,000 or 18% of the real price

From above example, Wom Finance take the price of their credit product between Rp.14,574,000
– Rp.19,400,000 with the profit between Rp.2,224,000– Rp.7,050,000 or 18%-57% of profit.
For comparison :
Price list Honda Beat in Adira finance
TYPE DP INSTALLMENT (Rp)
HONDA BEAT (Rp) 9 15 21 27 33
1,700,000 1,470,000 935,000 718,000 597,000 525,000
1,850,000 1,451,000 923,000 709,000 590,000 518,000
2,000,000 1,433,000 910,000 700,000 582,000 512,000
2,250,000 1,402,000 890,000 684,000 569,000 501,000
REAL PRICE 2,500,000 1,370,000 870,000 669,000 557,000 489,000
Rp12,350,000 2,750,000 1,339,000 850,000 654,000 544,000 478,000
3,000,000 1,308,000 830,000 639,000 531,000 467,000
3,250,000 1,277,000 810,000 623,000 519,000 456,000
3,500,000 1,245,000 790,000 608,000 506,000 445,000
4,000,000 1,183,000 750,000 577,000 480,000 423,000

TYPE DP TOTAL INSTALLMENT (Rp)

HONDA BEAT (Rp) 9 15 21 27 33
1,700,000 14,930,000 15,725,000 16,778,000 17,819,000 19,025,000
1,850,000 14,909,000 15,695,000 16,739,000 17,780,000 18,944,000
2,000,000 14,897,000 15,650,000 16,700,000 17,714,000 18,896,000
2,250,000 14,868,000 15,600,000 16,614,000 17,613,000 18,783,000
REAL PRICE 2,500,000 14,830,000 15,550,000 16,549,000 17,539,000 18,637,000
Rp12,350,000 2,750,000 14,801,000 15,500,000 16,484,000 17,438,000 18,524,000
3,000,000 14,772,000 15,450,000 16,419,000 17,337,000 18,411,000
3,250,000 14,743,000 15,400,000 16,333,000 17,263,000 18,298,000
3,500,000 14,705,000 15,350,000 16,268,000 17,162,000 18,185,000
4,000,000 14,647,000 15,250,000 16,117,000 16,960,000 17,959,000

- Maximum revenue of Honda Beat credit in Adira finance is on Rp.1,700,000 for down
payment with 33 times installment. The turnover is Rp.19,025,000 and the profit is
Rp.6,665,000 or 54% of the real price
- Minimum revenue of Honda Beat credit in Adira finance is on Rp.4,000,000 for down
payment with 9 times installment. The turnover is Rp.14,647,000 and the profit is
Rp.2,297,000 or 18,6% of the real price

In above comparison, Adira Finance take the price of their credit product between Rp.14,647,000
– Rp.19,025,000 with the profit between Rp.2,297,000 – Rp.6,665,000 or 18,6%-54% of profit.
From above comparison, there is no significant different between Wom finance and Adira
finance price and profit. Therefore, we can say that Wom finance price is the market price for
multi finance business

Wom finance also provide discount price or customer’s privilege with KAWAN program or
“Kartu Wom Bermanfaat”. Member of KAWAN can get the discount service and spare part.

Merger, Acquisition Activity, Joint Venture and Strategic Alliances

In 2005, PT Bank Internasional Indonesia, Tbk. (Bank BII) and its consortium, International
Finance Corporation (IFC) and DBS Nominees Pte. Ltd., became the strategic partners of Wom
Finance by acquiring 67% of the Company’s shares.

Shareholders composition
Shareholders Number of share (%) Nominal value (Rp)
PT. BII Tbk. 1,000,600,000 50,03 100,060,000,000

International Finance Corporation 239,400,000 11.97 23,940,000,000

DBS Nominees Pte. Ltd Singapore 100,000,000 5 10,000,000,000

Public 660,000,000 33 66,000,000,000

Basically, yearly financial requirement of Wom finance is Rp.9 trillion. That’s amount obtained
60% - 70% from PT Bank Internasional Indonesia Tbk (BII), 5% - 10% from internal cash and
20% from bond and loans from other bank. Bank BII support Wom finance motorcycle financing
with joint financing program.
Wom finance also well establish joint venture with open the payment point through PT Pos
Indonesia, BRI, Mandiri Bank, Panin Bank and BCS in order to make easier the payment process
and to secure their financial sources.

Total Production & Cost of Production

In WOM Finance, total production is the total motorcycle financing a year include units amount
of the motorcycles sales and the amount of financing. Cost of production is company’s
operational expenses include salaries and employee’s benefit.

In 2007, WOM Finance loses Rp.281,9 billion because the company should followed Bank
Indonesia’s regulation regarding risk management consolidation that cause slowing down in the
company’s performance as the effect of increment of provision for doubtful accounts. This policy
intended to subsidiary companies of which of the majority of shares are own by banks. Effect
from this policy, company’s operational expenses increased 68% from Rp.938,6 billion in 2006
to Rp.1,576.7 billion. Although the company got loses, Wom finance still occupy the big third
motor cycle financing in Indonesia and booked Rp.4,8 trillion total assets at the end of the year.
In this year the company has financed 475,771 units motorcycles worth Rp.4,8 trillion or over
5,7% of sales target in 2007 of 450,000 units. Sales of new motor cycles contributed up to 68,5%
of the total number of motor cycles financed, or equal to 325,945 units which a financing of
Rp.3,7 trillion. Financing of used motorcycles amounted to Rp.1,1 trillion with 149,829 units
sold or 31,5% of total number of motorcycles financed in the year.

In 2008, Wom finance achieve Rp.5 trillion of total motorcycle financing or rising 4,2%
compared to year 2007. That financing equal to 487,117 unit motorcycle or increasing 2,4%
compared to year 2007. Operating expenses decrease from Rp.1,576.7 billion in 2007 to
Rp.1,299.5 billion in 2008. Decreasing of operating expenses driven by 43,2% decreased in
provision for doubtful accounts and financing costs, from Rp.485,7 billion in 2007 to Rp.276
billion in 2008.

In 2009, the company booked Rp.4,2 trillion of total motorcycle financing or equal to 270,000
unit motorcycle. Operating expenses in this year was Rp.1,263 billion, which decreased
compared to year 2008 driven by decreasing in financial cost amounting.

INCOME STATEMENTS 2007 2008 2009

Total production
Total units of motorcycle 475,771 487,117 270,000
Total financing (Rp) 4,800,000,000,000 5,000,000,000,000 4,200,000,000,000
Cost production (Rp) 1,576,700,000 1,299,500,000 1,263,000,000
 CHAPTER FIVE
PERFORMANCE OF COMPANY
(By Annisa Nurrachman)

WOM Finance is one of big players in consumer financing specifically engaged in two-
wheeled motor vehicles with japanese brand that is Honda, Yamaha dan Suzuki where these
brands have great market share in this country.
There are four important things a multifinance company must do to keep its highly
quality of performance: Focus on running the businesses, Enhancing the quality of services,
Optimizing IT to support the business activity, Improving operational cost efficiency. Some of
them are expanding branch offices and working on market potential outside Java island [2].

Production efficiency
 The longer company running its business, the more efficient and stable the company will
be. Suwandi Wiratno (the president director of WOM Finance) stated that a good role model of
financing company should be able optimizing its income from many ways of services and has
efficiently managerial capability along with properly risk management implementation.
WOM Finance is aware that there are three very valuable assets for existence of the
company also for supporting the operational efficiency and productivity:
 Human resources →

◦ Conducting MDP (Management Development Program) to qualifying the employees

◦ External training which is based on each department’s needs

◦ Internal training that is done on a regular basis: credit initiation, collection training
and leadership training (soft skill)

◦ Competency base and major criteria performance indicator (KPI) in assessing

employee’s performance, to encourage employee to show continuity in the
productivity and excellent achievement to ensure sustainable growth

◦ By uniting employee’s efforts, company can reach a higher goal.

 Information Technology (IT) → IT development to accommodate reliable network in

supporting company's operation and process. WOM Finance is approaching one day
service by continuously renewing and preparing its proper infrastructure

◦ The Company has developed Customer Care, handled by professional consultants

which are always committed to give the best service. So the information easier to get
for every problem relating to financing process up to settlement process of
motorcycle financing.

◦ Company’s website with new enhancement to provide an easy public access to the
Company’s information. The website can be accessed through www.wom.co.id.

 Risk management → starting from credit application proposal, initial process of credit
approval, final process of credit approved.

Performance’s overview in 2007

 WOM Finance had 102 branch offices around Indonesia and cooperating with more than
4,000 dealers in Indonesia.

 Permanent employees: WOM Finance employed 2.742 permanent employees

 Expense of salary and benefit for employees: Rp.129.4 billion

 Employee’s salary and benefit on this year is increasing 96.9 % into Rp.129.4 billion,
because of the opening of new branch offices, and the incentive given over the
sales/financing is significantly increased.
Measurement of average income for each employee in the company was obtained by
dividing Expenses of salary and benefit for employees by the number of Permanent
employees:
Rp.129.4 billion / 2,742 permanent employees = Rp.0.04719 billion  Rp.47.19
million.
 Total revenues: Rp.1, 231.2 billion

 Total expenses: Rp.1, 576.7 billion

 Ratio of efficiency (total operational expenses/ total operational revenues) [2]:

The ratio that is used to calculate this efficiency is comparing operational expenses
with operational revenues. The less this comparison number the more efficient company
is. Ratio of efficiency  Rp.1, 576.7 billion / Rp.1, 231.2 billion = 1.2806.

According to the sales composition by brand shown above, in 2007 Yamaha held the
highest sales, and then followed by Honda in the second position. Yamaha and Honda
contributed the most productive brands to WOM Finance sales/financing revenue.
Performance’s overview in 2008
 The number of branch offices:

o There were 140 networks including branch offices, financing unit offices and
financing postal office in nationwide. WOM Finance remained focusing on
market potential and dealer’s partnership.

o There was grand opening of branch offices in Yogyakarta and Bengkulu.

o In 2008, the area of east Indonesia has increasing purchasing power due to the
raise of commodity’s price.

o In the forth quartile in 2008, global economic crisis had caused commodity’s price
decreasing, so WOM stopped the expansion in the area of east Indonesia and back
focusing on financing activities in Java island.

 Permanent employees: There were 3,113 permanent employees, it is slightly increasing

compared to the year before.

 Total revenues: Rp.1,337.6 billion

  Total expenses: Rp.1,299.5 billion

 Expenses of salary and benefit for employees: Rp.176.4 billion

Measurement of average income for each employee in the company was obtained
by dividing Expenses of salary and benefit for employees by the number of Permanent
employees:
Rp.176.4 billion / 3,113 permanent employees = Rp. 0.05667 billion  Rp.56.67
million.
 Ratio of efficiency (total operational expenses/ total operational revenues) [2]:

Ratio of efficiency  Rp.1, 299.5 billion / Rp.1, 337.6 billion = 0.9715

According to financial crisis situation, the company managed the existing human
resources to be more focus on core business to get work efficiency and optimal productivity, this
was supported by the online system, which was in 2008 WOM Finance was starting to
implement its online system as part of IT support. This online system connected each branches
with head office. So it helped the company to increase services to its customers, by:
 Monitoring the updated consumer’s financing data,

 Enabling consumers doing their payment transaction throughout WOM Finance branches
anywhere

According to the sales composition by brand shown above, in 2008 Honda had replaced
Yamaha in the first position as the highest sales/financing contributed to the company, and then
Yamaha shifted into the second position. After all, Yamaha and Honda kept being the most
productive brands to WOM Finance sales/financing revenue.
Performance’s overview in 2009
 The number of branches:

o WOM maintained itself strategically with hard work to take all opportunities in
the market to obtain the best result. Business networks were continuously
expanded by opening new branches, unit offices, and sales representative offices
over Indonesia to absorb wider market share throughout the country. In 2009, the
Company had 141 business networks which consisted of branch offices, unit
offices, and sales representative offices.

 Employees:

o There were 3.311 permanent employees in the company.

o In 2009, Branch Manager Refreshment Program (MRP) is held for all branch
managers.

 Expenses of salary and benefit for employees: Rp.296.44 billion

 There was increment in the expenses of salary and benefit for employees, because
the raise of employees’ number as much as 603 persons compared to the year before.
Measurement of average income for each employee in the company was obtained
by dividing Expenses of salary and benefit for employees by the number of Permanent
employees:
Rp.296.44 billion / 3,311 permanent employees = Rp. 0.089532 billion  Rp.89.532
million.
 Total revenues: Rp.1, 355, 527 million  Rp.1,355.53 billion

 Total expenses: Rp.1, 262, 925 million  Rp.1,262.93 billion

Nonperforming loan was decreased by 50%, due to the company’s success to improve
the quality by implementing prudent risk management principal. It was supported by IT
system:
o Loan Origination System (LOS) has been built in risk policy to manage the flexible
application process flow for faster and easier approval, product segmentation and
management dashboard to monitor the process and control the quality of portfolio,
internal checking to identify blacklist customer.

◦ In February 2009, the Company has developed an Account Status Daily Update that
could monitor the account overdue status on daily basis. It also helps the Company to
establish a strategic collection process to improve its non performing loan level.

◦ In August 2009, the Company has successfully implemented Oracle Finance that
could generate accurate and timely report and also support in preparing certain reports
easily.

 Ratio of efficiency (total operational expenses / total operational revenues) [2]:

Ratio of efficiency  Rp. 1,262.93 billion / Rp. 1,355.53 billion = 0.9317

In the first quartile of 2009, the company was still experiencing fluctuative situation as
the impact from global economic crisis. This made company was more struggling and
challenging, caused of higher interest rate given by banks and the difficulty of liquidity. Then the
number of unemployment and poor people increased. As a result, the decreasing in consumers’
purchases capability and domestic consumption affected the sales of new motorcycles in 2009
which was decreasing as much as 7% from last year. Entering the second quartile of 2009, the
condition of economic and consumer financing industry had been better, recovering and
improving that is especially on August and September approaching to Muslim’s celebration day.
 However, according to the motorcycles sales/financing composition by brand in 2009 as
shown above, again Yamaha back occupying the highest sales/financing, and then followed by
Honda. Those two brands are always being the most productive in contributing the company’s
revenues consecutively from 2007 through 2009.
During 2009, the Company also successfully implemented other various IT supporting
applications:
 Payment system  as the convenient facilities for the customers to pay their installment,
such as: Field Collection Management System, online payment point, EDC (Electronic
Data Captured) payment point, extended payment channel through automatic teller
machine with cooperation with PT Bank Internasional Indonesia, Tbk, PT Bank Mandiri
Tbk, and with PT Pos Indonesia to provide customers with faster, easier and more
convenient service in paying their installment.

 KAWAN (KArtu Wom bermANfaat) Membership Card System  the privilege card for
the Company’s customer, valid for two years, can be extended as long as the member is
still the Company’s active customer. The KAWAN member receives various privileges
such as obtaining more points to win prize award and discount for services at participant
merchants.

In September 2009, the Company has successfully tested disaster recovery center to
address the Company’s going concern from the possibility of disaster by nature or others
damage. The backup server is located at different place from the production system to serve the
business in case of malfunction or disaster occurs to the production system.

Dynamic of the company in the whole industry

Consumer financing business sector, especially for automotive vehicles financing is being
more attractive for the investors. The focus of multifinance business into this kind of financing
and followed by the entries of many banks into this sector as well to give direct financing, has in
fact strengthen the competition in this market. A high competition in this multifinance industry
causes the interest-rate setting for every company must be competitive as well.
Beside have to compete with other players in this industry, a multifinance company must
facing new competitors who are coming from banking industry. In this case, a multifinance is
hard to compete with the banks, because all this time, most of multifinance companies relying
their source of funds from banks to support their businesses. Therefore the high interest rate
charged by bank to the multifinance company, affecting to a relatively high interest rate offered
by a multifinance company to its consumers [2]. In this case, an automotive industry has a linier
movement with the financing businesses. They are giving benefit of each other. That means the
growth in financing industry is highly depending on the automotive company production.
Therefore, dealers hold an important role to acquire new consumer. In order to stimulate the new
financing from dealers, the Company always tries to maintain close and good relationship with
dealers by providing various incentive programs to dealers. The incentive programs are
incentive, prizes, and also tour package [2].
The average market share of some multifinance companies in financing motorcycles (%)
Other
Federal International
Year WOM Finance Adira Finance Multifinance
Finance (FIF)
Companies
in 2007 9.90% - 52% 38.10%
in 2008 8.10% 13.60% 49% 29.30%
in 2009 6.70% 13.20% 44.1% 80.10%
*Source: www.wom.co.id; www.adira.co.id; www.fif.co.id
 The average market share of WOM Finance in financing motorcycles in 2007 is 9.9 %, in
2008 is 8.1 %, and in 2009 is 6.7 %. The market share decreased in line with the emerging of
new competitors coming in this industry segment. That competitively market was tightening
along with many new financing companies jumped in this industry. In example, BFI started
consumer financing for motorcycles at the first time on forth quartile in 2007. And would be
more active conducted in the next year (in 2008 and afterwards). This made a company was
taking some portion of the market share to get new costumers, besides maintaining the existing
ones [www.bfi.co.id].
In the other side, any other companies distinguished themselves by offering special
services to grab more market share. For examples: accelerating credit application process,
simpler and easier documentation requirements, and competitive interest-rate. Those are what
WOM Finance should do to maintain its existence by providing better services to customers and
dealers, competitive credit requirements, keep improving the motorcycles market and start
looking for other new brands. The company is closely monitoring the strategy applied by the
competitors and responding properly to compete in the industry. Given the same service provided
by multi-finance companies, it is important for the Company to increase the services excellence,
by differentiating the financing scheme to attract more customers.

Infobank has been doing a survey to rate among 148 financing companies per December
2008-2009. the rating assesment criterion consisting of several points such as growth, financing,
capital, solvability, efficiency, rentability (ROA, ROE). Whereas the financing companies are
classified into three fundamental category such as the ones with asset above Rp. 1 trillion, asset
in range between Rp. 100 Billion and Rp. 1 trillion, and asset under Rp. 100 Billion. Then, based
on the survey result, PT. Wahana Ottomitra Multiartha (WOM Finance) is included in the
category of financing companies with asset above Rp. 1 trillion, occupying on the thirty-third
position [2].
The infobank magazine also reviewed the group-based ten best financing companies of
ownership group-based, submitted capital group-based and go public group-based. WOM
Finance is included within the go public group-based occupying the ninth position. It awarded of
a “good” predicate, an improved and better quality than the year before (in 2008) which was
attached to a “not good” predicate [2].

Corporate Social Responsibility

Corporate Social Responsibility (CSR) has a significant role in every company at this
time which is indivisible part of company’s operations. CSR is considered to improve the lives of
the nation’s people and has widely positive effect on its prosperity and purchasing power. WOM
Finance has committed in implementing its CSR and believes that the welfare of society is
essentially affecting the company growth.
WOM Finance has an objective to develop a high-performance society through its
activity in order to enhance its performance. To make the objective comes into reality, WOM
Finance works together with several organizations active in economics, education, health-care
and social care through such ways: society financing / funding, activity sponsorship, donations,
and active participation. To coordinate these activities, WOM Finance has a substantial internal
unit named “Humanikasih”, that shows its great concern and care for other people in a less-
privileged society:
- WOM Finance organizes charity events, sponsoring activities, offering donations, and
active participation including through collecting the employees and the donors to pass
on their financial support for those who really need that.

- In 2007, WOM Finance was assisting in building restoration to one of the Elementary
Schools in Cidokom, Bogor, also with all the necessary facilities to facilitate the
school in the process of education (learning-teaching process). WOM Finance knows
that the quality of education is important for the continuity in nationwide generation
since it can keep our nation moving forward and growing toward bright future.

- WOM Finance provided an extension of the due date payments to its customers
which being victims during flood disaster was running down Jakarta

- Visit local penitentiaries as well as other humanitarian services like giving morale and
material support

- The other social activity such as blood donor

- In 2008, WOM Finance through Humanikasih conducted “Bakti Sosial Bibir

Sumbing” and “Celah Langit-Langit” program which successful in helping less than
hundreds children to get free surgery, treatment, and medicine. Under this program,
WOM Finance was attempting to raise confidences on children who suffering “bibir
sumbing” and “celah langit langit”, so they could reach a better future

WOM Finance has a concept of “Learn to Give”, that provide assistance with much
benefit it offers to company’s management and employees, also those who are in really
need of. Along with this contribution to society, WOM Finance is expecting to build an
image as a company that actively participates to give positive values in the nation’s
population.
[1]. www.wom.co.id
[2]. Infobank magazine/No.377/August 2010
[3]. (Investor Daily - 11 Maret 2009) http://www.ifsa.or.id/news_detail.php?id=2550
 CHAPTER SIX
GOVERNMENT POLICY TOWARD MULTIFINANCE INDUSTRY
(By Respati Wulandari)

Definitions and legal forms of multifinance companies

Speaking about the current financing company that is widely available in the
community can not be separated from the two legislations namely the Regulation of the
Minister of Finance, number 84 year 2006 on the financing Company and Presidential
Regulation number 9 year 2009 on financial institutions. In Regulation of the Minister of
Finance, explained in article 1 letter b, called the finance company is a business entity
outside the bank and non-bank financial institutions specifically established to undertake
activities that are included in the business field. Financing Company is a specialized
business entities established to perform Leasing, Factoring, Consumer Finance, and / or
business credit card.
Two of the above regulations which incidentally is the implementing regulations
(operational rule) of finance companies have different definitions. However, the adage
lex lex posterior derogat priori definition of Presidential Regulation no.9 in 2009 could be
the last reference as applicable laws lately. Furthermore, the definition states that a
financing company that is a business entity. However, the form of business entity has not
been determined definitively, the new article 6 of Presidential Regulation No. 9 of 2009
stipulated that the form of finance companies to form a limited liability company or
cooperative.
Settings finance company in the form of limited liability companies and
cooperatives are referring to the provisions of the legislation in force, each Law number 1
year 1995 regarding Limited Liability Company and Law No 25 year 1992 on
cooperatives. Although the cooperative opened the possibility to become legal entities
financing company, but when viewed from the cooperative goals contained in article 3 of
law No. 25 year 1992, where it is stated that the cooperative aims to promote the welfare
of members in particular and society in general and helped build the national economic
order in order to create an advanced society, just and prosperous based on Pancasila and
the Constitution of 1945, seems less appropriate if the business entity that is used to
finance company is cooperative. As with the legal form of limited liability as a business
entity. Form of limited liability corporation will provide flexibility for the company
financing in support of operational steps, considering the limited liability laws have been
set more clear about the creation, operation, supervision until the liquidation of limited
liability.
Then associated with funding in the finance company, principally if you look at
the provisions of article 27 of PMK no 84/PMK.021/2006 about finance companies, there
are two types of funding that can be done by finance companies, the first, with
channeling financing, and second, with a joint financing. In PMK, the stated that the
financing of channeling all funds for the financing comes from commercial banks and the
risks arising from these activities are at commercial bank, finance companies which only
act as a manager and earn fees from managing the fund. Furthermore, in joint financing,
according to the PMK was stated that the source of funds for this financing comes from
finance companies and commercial bank, where the risk arising from the joint financing
of a burden each party in proportion or in accordance with the agreement.
Determination of finance company funding on this usually depends on how the
finance company. If the finance company was a subsidiary of or affiliated with bank,
funding is usually carried out by finance companies by channeling financing. If the
finance company is independent and not affiliated with bank, financing method
performed by the form of joint financing. However the way, the selection of these
financing methods are not bound depends readiness of each finance company.

Obstacles of Multi-finance Role

But the problem, although it has the potential to be financial institutions
channeling people's business credit, finance companies are not legally allowed to make
loans or extend credit directly to the public. Based on Presidential Regulation No. 9 of
2009 and PMK No. 84 of 2006, financing business activities limited to the business
leasing, factoring, and credit card business or consumer financing. While direct lending
can only be done by the banking institutions and financial institutions in addition to
multi-finance companies, cooperatives and companies which venture partners.
 Optimization of multi-finance company's role in the lending business people also
have other constraints. Based on the same legal provisions, finance companies can not
freely conduct fundraising activities to finance the company's business development.
Strictly speaking, finance companies are prohibited from conducting direct withdrawal of
funds from the public, either in the form of demand, deposit, savings and / or other
equivalent forms of it and issued a promissory note prohibited except as collateral for
loans from banks that become creditors. This causes the cost of funds finance companies
to be expensive.

Revised Presidential Regulation and PMK

To optimize the multifinance role in the economic development needed
improvements to the legislation that became the legal basis for financing the company's
activities mainly on the Presidential Regulation No. 9 of 2009 on Financing Institutions
and Regulation of the Minister of Finance no 84/PMK.021/2006 about finance companies
which restrict the activities of both finance companies in credit and collection activities
and to finance the development of multi-finance business.
With the revision of these regulations, multi-finance can raise their own funds
directly from the community as well as distribute it back to the communities in need so
that the stagnation of lending, particularly the people's business loans through bank can
be immediately solved. In addition, with the authority to collect and manage funds from
the public directly, multi-finance can provide credit to the community with a competitive
interest rate and competitive with banks. So that lending to the public walk more optimal
and may be one driving force for national economic growth.

Multifinance Companies Issues.

Capital Market Supervisory Agency and Financial Institution Supervisory Agency
(Bapepam-LK) monitor compliance multifinance 208 companies in meeting the rules.
Monitoring activities are referred to as the sweep was aimed at detecting the health
financing industry after Indonesia affected by the global crisis. Bapepam-LK indicated
many multifinance companies affected by the crisis.
 In the first quarter of 2009, Bapepam-LK has closed six multi-finance companies.
This amount is almost equal to the number who lost their multi-year operating license
along ago, the seven multi-finance. Head of Financing and Guarantee Institution
Bapepam-LK said, Bapepam rely on two sources in the sweep, the financial report and
examination results.
What is monitored by Bapepam in accordance PMK no 84/PMK.021/2006 of
Financing Company. According to this rule, an indicator that gets attention, including
multi-finance minimum paid up capital of Rp. 100 billion. Finance Company accounts
receivable financing are also required to have at least 40% of total assets. That means
they have to really run the business of financing, rather than have permission. Another
consideration, the level of corporate compliance in submitting reports on activities, both
monthly reports, quarterly reports or annual reports audited.
Later, the company that will be examined according to the capital will be divided
into four categories. Namely companies categorized capital of Rp 25 billion - Rp 50
billion, RP 50 billion – RP 75 billion, Rp 75 billion- Rp100 billion, and companies with
capital of more than Rp 100 billion.

Related article:
(Bisnis Indonesia page 5, January 10 2011)

15 Insurers in the balance

BISNIS INDONESIA

JAKARTA: National Insurance Authority threatens to remove business license of 15

insurers if they fail to meet the requirement of minimum capital by March 31.

Based on the Government Law No. 81/2008 on Insurance Company Capital, every
insurance company in 2010 is obliged to fill the minimum capital of IDR40 billion, while
those having sharia unit must have IDR65 billion, and reinsurance company must have
IDR100 billion.
As of December 31, 2010, four reinsurance companies had more than IDR100 billion in
capital. Meanwhile, 15 of 138 insurance companies had not met the minimum capital.

Head Bureau of Insurance in Capital Market and Financial Institution Supervisory

Agency (Bapepam-LK) Isa Rachmatarwata said that the number of insurers not
completing the requirement of minimum capital by the end of 2010 decreased from 29 in
September, consisting of eight life insurance and 21 general insurance companies.

He said that within the last three months, there were three life insurance and three general
insurance companies having completed the capital increase, while six general companies
were in the process of increasing capital.

Moreover, two general insurance companies returned their business license since they
quit the operation.

According to him, of 15 companies not having completed the minimum capital by

December 31, 2010, five were life insurance companies, and 10 were general insurance
companies, two of which had sharia unit. “We are still monitoring them until the deadline
of March 31,” Isa said last weekend.

However, he did not specify the 15 companies that are hanging in the balance.

He said that the companies not having completed the capital are still seeking to increase
their capital through action plan, which has been submitted to Bapepam-LK.

In the meantime, those two insurers with sharia unit not having completed the capital face
two possibilities to resolve the problem, i.e. shifting some of their conventional capital to
their sharia unit and returning their sharia business license.

Returning license

The option of shifting part of their capital is aimed at meeting the requirement of IDR40
billion in minimum conventional capital and IDR25 billion in sharia unit. So, if they have
more conventional capital, they can shift the remaining to their unit. “But, is it possible
that they return the license of sharia unit,” he added.

The requirement of insurance company capital, as stated in the Law No.81/2008, is

supposed to be completed by December 31, 2010, but there has been extension until the
deadline of March 31, 2011.

Chairperson Indonesia General Insurance Companies Association (AAUI) Kornelius

Simanjuntak had previously admitted that it was difficult, even for the regulator, to detect
which companies not having completed the minimum capital.

He reiterated that the capital stated in the law is not the paid capital but equities. In this
case, the equities of each company may change anytime depending on the condition and
business activities.

“For example, if in December the company got big claims, its equities should decrease
sharply, but if it got big premium, the equities would also raise.”

According to him, some insurance companies not having completed the requirement
must have tried many efforts in many ways to avoid the removal of their business license.
 CHAPTER SEVEN
FINANCIAL PERFORMANCES
(By Galih Savitri)

WOM Finance’s Highlight Financials

Assets
From 2007 until 2009, WOM Finance’s assets was decreasing from year to year,
which mainly caused by declining consumer financing receivables which was due to
decrease in new acquisition of consumer financing transactions entered during the year
compared to previous year. On the end of 2007, the Company’s assets was Rp 4,813
billion. On 2008, the Company’s assets was Rp 3,433 billion, 27.2 % decrease of total
assets compared to end of year of 2007 (Table 2). The decrease was also due to declining
consumer financing receivables.
As of 31 December 2009, Wom Finance’s assets is the 9 th biggest assets among
the other rated Indonesian multifinance companies (Table 1) with the total assets Rp
2,573 billion, which decreased 25.1% compared to 2008 (Table 2). The decrease was
mostly derived from decrease in net consumer financing receivable which was caused by
the decrease in new acquisition of consumer financing transactions entered during 2009
compared to year 2008 and also caused by more sales were channeled to PT Bank
Internasional Indonesia, Tbk. The decrease in assets was also due to decrease in
derivative receivable and deferred tax assets.

Table 1: Rated Indonesian Multifinance Companies’s Assets

# Companies Total Ratings**
Assets*

(IDR Pefindo
trillion)

1 Perum Pegadaian 15.9 idAA+/Stable

2 Astra Sedaya Finance 9.9 idAA-/Stable
3 Oto Multiartha 9.8 idAA-/Stable
4 Federal International Finance 9.1 idAA-/Stable
5 Bussan Auto Finance 8.3 idAA-/Stable
6 Summit Oto Finance 8.2 idAA-/Stable
7 Adira Dinamika Multifinance 4.3 idAA/Stable
8 Suzuki Finance Indonesia 2.9 idA-/Stable
9 Wahana Ottomitra Multiartha 2.6 idA-/Stable
10 BFI Finance Indonesia 2.4 idA-/Stable
11 BCA Finance 2 idAA/Stable
12 Indomobil Finance Indonesia 1.7 idA-/Stable
13 Mandiri Tunas Finance 0.5 idA/Stable
Source: InfoBank Magazine, Pefindo

Liabilities
On 2007, total liabilities was Rp 4,461 billion. The Company’s total liabilities
decreased by 29.2% to Rp 3,157.3 billion in 2008 (Table 2). The decrease was due to the
reduction of bank loans and net bonds payables. The bonds payables decreased as WOM
Finance has paid the “Bonds II WOM Finance Year 2005 B Series” of Rp 140 billion and
“Bonds III WOM Finance Year 2006 A Series” with the nominal value of Rp 200 billion.
As of 31 December 2009, the total liabilities was Rp 2,236 billion, which
decreased by 29.2% compared to year 2008 (Table 2). The decrease was mostly derived
from decrease in bank loans, decrease in other payables, decrease in bonds payable, and
decrease in due to related parties. The decrease in bank loans is due to repayment of loans
to Deutsche Investitions Und Entwicklungsgesselscaft MBH, Germany amounting to Rp
25 billion on 15 January 2009 and Rp 25 billion on 15 July 2009 and Bayerische Hypo-
Und Vereinsbank AG, Singapore amounting to Rp 242 billion during year 2009. The
decrease in other payables is mainly due to decrease in payables on joint financing, loan
channeling and sale of receivables transactions that was inline with decrease in consumer
financing receivable. The decrease in bonds payable is due to settlement of WOM II
Bonds Year 2005 Series C amounting to Rp 170 billion and WOM III Bonds Year 2006
Series B amounting to Rp 465 billion on 7 June 2009. The decrease in due to related
parties was due to repayment of loans to International Finance Corporation amounting to
Rp 23 billion on 16 March 2009 and Rp 23 billion on 15 September 2009.
Equity
On 2007, total equity was Rp 255 billion. On 2008, the total equity was increased
by 8.1 % to 275.7 billion (Table 2). The increase was caused by the decrease in the un-
appropriated accumulated losses.
The total equity as of 31 December 2009 was Rp 336 billion (Table 2), which
increased by 22% compared to year 2008. The increase was due to net income during the
year.

Revenues
The Company generates Rp 1,191 billion operating revenues in 2007. In 2008, the
Company’s operating revenues increased by 12.3% to Rp 1,462 billion (Table 2) from
consumer financing, interest income from deposits, and other income in the form of
insurance discount, insurance claim income, administration fee and payment penalties.
The total revenues in 2009 was Rp 1,356 billion (Table 2), which decreased by
7.3% compared to year 2008. The decreased was mostly due to decrease in consumer
financing income which was mainly due to decrease in new acquisition of consumer
financing transactions entered during the year.

Expenses
On 2007, operating expenses was Rp 1,577 billion. The operating expenses was
decreased by 9.7 % to Rp 1,424 billion in 2008. The decrease was mainly driven by a
decreased in provision for doubtful accounts and financing costs which was due to
decrease in bank loan.
The total expenses in 2009 was Rp 1,263 billion (Table 2), which decreased by
11.3% compared to year 2008. The decrease was mostly due to decrease in financing cost
and decrease in provision for doubtful accounts. Decrease in financing cost was caused
by decrease in bank loan and bonds payable. The decrease in provision for doubtful
accounts was caused by decrease in consumer financing receivables and improvement in
portfolio quality.
Net Income
On 2007, the Company suffered the net loss of Rp 282 billion as a result of the
implementation of Bank Indonesia’s regulation regarding the risk management
consolidation concerning the provisioning policy for subsidiary companies of which the
majority of shares are owned by banks. As a subsidiary of BII, WOM Finance was
required to apply all the provisioning policy based on productive assets classification in
accordance with the banking regulation.
On 2008, the Company was able to enjoyed a net profit of Rp 21 billion, which
was an increase of 107.3% from the net loss in 2007. The increase in 2008 income was
arising from increase in other income, decrease in financing costs as well as decrease in
provision for doubtful accounts. The Company did not distribute cash dividend for fiscal
year 2007 and 2008 due to the Company suffer losses in 2007 and net income in 2008
was unable to cover the losses in 2007.
The net income in 2009 was Rp 61 billion (Table 2), which increased by 193%
compared to year 2008. The increase was mostly contributed by the Company’s success
to reduce the financing cost and its bad debt by improving its portfolio quality.

Ratios
Return on Equity (ROE)
Return on equity indicates the Company’s capability to generate return for its
shareholders which is measured by comparing the net income to the total equity. WOM
Finance’s 2007 – 2009 ROE was always increased from year to year. In 2007, ROE was
(110.5)% due to the Company’s net loss. In 2008, ROE was 7.4% and 18% in 2009
(Table 2) due to higher increase in net income.

Return on Assets (ROA)

Return on assets indicates the Company’s capability to generate return from its
total assets which is measured by comparing the net income to the total assets. The
Company’s ROA in 2007 was (6)% due to the Company’s net loss. In 2008, ROA was
increased to 0.6% and increased to 2.4% in 2009 (Table 2). The increase was due to the
increase in net income while the total assets were decreased.
Gearing Ratio
Gearing ratio which is a measure of financial leverage, demonstrating the degree
of the company’s activities are funded by owner’s funds versus creditor’s funds is
decreasing from 2007-2009. This is good since a company with high gearing ratio is more
vulnerable to downturns in the business cycle because it has to pay interest, pay debts
regardless of how bad the sales are. The ratio of debt to equity of WOM Finance was 12
times in 2007. In 2008, the ratio was decreased to 8 times and decreased significantly to
4.6 times in 2009 (Table 2).

Non Performing Loan (NPL)

NPL which is also one of financials ratio used to measured a company financial is
also shows good sign. NPL of WOM Finance was decreased from 2007 until 2009. In
2007, NPL was 6.7%. It was decreased to 4.8% in 2008 and decreased to 2.4% in 2009
(Table 2). The decrease was due to the Company’s success to improve its portfolio quality
by implementing prudent risk management principal.

Table 2: WOM Finance’s Financial Highlights

As of Dec. 31 2009 2008 2007
Financial Highlights (Bil. IDR)
2,57 3,43 4,81
Assets 3 3 3
2,23 3,15 4,46
Liabilities 6 7 1
33 27 35
Equity 6 6 2
1,35 1,46 1,19
Revenues 6 2 1
1,26 1,42 1,57
Expenses 3 4 7
60,67 20,71 (28
Net income 1 1 2)
Ratios
18. 7. (110.
Return on equity (%) 0 5 5)
2. 0. (6.
Return on assets (%) 4 6 0)
4. 8. 12.
Gearing ratio (x) 6 0 0
 2. 4. 6.
Non performing loan (%) 4 8 7

Bonds
As of December 31, 2009, there were four public offering of WOM Finance bonds.
WOM Finance Bonds I
Bond Nominal Value Fixed Interest Rate Due Date
Series A Rp 150,000,000,000 13.50% 11 November 2006
Series B Rp 150,000,000,000 13.75% 11 November 2007

WOM Finance Bonds II

Bond Nominal Value Fixed Interest Rate Due Date
Series A Rp 190,000,000,000 12.75% 7 June 2007
Series B Rp 140,000,000,000 13.25% 7 June 2008
Series C Rp 170,000,000,000 13.90% 7 June 2009

WOM Finance Bonds III

Bond Nominal Value Fixed Interest Rate Due Date
Series A Rp 200,000,000,000 14.85% 7 June 2008
Series B Rp 465,000,000,000 15.15% 7 June 2009
Series C Rp 160,000,000,000 15.35% 7 June 2010

WOM Finance Bonds IV

Bond Nominal Value Fixed Interest Rate Due Date
Series A Rp 225,000,000,000 11.25% May 2010
Series B Rp 185,000,000,000 11.63% May 2011
Series C Rp 590,000,000,000 12.00% November 2011

Peer Comparison
Table 3: Selected Peer Comparison
WOM Finance BFI Finance Adira Finance
As of Dec. 31 2009 2008 2007 2009 2008 2007 2009 2008 2007
Financial Highlights (Bil. IDR)
2,57 3,43 4,81
Assets 3 3 3 2,393 3,531 2,524 4,330 3,592 3,302
Liabilities 2,23 3,15 4,46 859 2,173 1,321 1,677 1,642 2,077
 6 7 1
33 27 35
Equity 6 6 2 1,534 1,358 1,203 2,652 1,950 1,225
1,35 1,46 1,19
Revenue 6 2 1 910 890 570 3,941 3,379 2,484
1,26 1,42 1,57
Expenses 3 4 7 518 560 291 2,283 1,959 1,683
6 2 (282
Net income 1 1 ) 301 232 200 1,212 1,020 560
Ratios
Return on equity 18. 7. (110.5
(%) 0 5 ) 17.8 18.6 21.3 45.7 52.3 45.7
2. 0. (6.0
Return on assets (%) 4 6 ) 9.9 7.7 10.2 13 28 17
4. 8. 12.
Gearing ratio (x) 6 0 0 0.9 1.2 0.3 0.6 0.8 1.7
Non performing loan 2. 4. 6.
(%) 4 8 7 0.8 1.2 1.0 0.8 0.9 1

CONCLUSION
 Multi finance industry in Indonesia significantly increases in 2007-2009 period in
term of total asset and profit. In the term of regulation, multi finance industry facing
more strict regulation applied by government. As a result, number of multi finance firms
decreased. Wholesale of motorcycle which can be represent as demand in this industry
(multi finance focusing on motorcycle financing) also significantly increased but the
multi finance industry get more competitive.

WOM Finance as a multi finance firm which focusing on motorcycle financing

get better and better performance in 2007-2009 period. From facing loss in 2007, WOM
started to get income in 2008 and get bigger income in 2009. Financials ratio shows that
WOM’s performance is getting better year-to-year. The competitive pricing of WOM
helped the firm to still gain revenues from consumer in the competitive Indonesian multi
finance industry.

Even though the market share of WOM Finance was decreasing over the year
2007 through 2009 due to more competitors joining in the multi finance industry, the
company had 141 business networks consisting of branch offices, unit offices, and sales
representative offices. WOM Finance has committed in implementing its Corporation
Social Responsibility and realizes that the welfare of society is essentially affecting the
company growth, to make it into reality WOM Finance works with several organizations
to be active in economics, education, health-care and social care.

The need of to revised these two regulation is very important to multi finance
companies development. The authority to collect and manage funds from the public
directly, multi finance companies can provide credit to the community with a
competitive rate and competitive with banks

REFERENCES
Infobank Magazine/No.377/August 2010
Investor Daily-11 Maret 2009
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www.niagafinance.com
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www.wikipedia.com
www.wom.co.id